Changes to mortgage applications

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In 2014, the rules surrounding mortgage applications changed after the Mortgage Market Review. This mainly affected basic mortgages but the rules also apply across a range of products.

The changes made the application process much more rigorous in a bid to make sure banks only lend to people who can afford the repayments.

Here's what you need to know:

  • You’ll need to provide proof: The new rules will require much more detailed proof of how much you earn and other financial commitments than was needed previously
  • You’ll be asked questions about other debts: This will include any loans you have as well as sums owed on credit cards and student loan repayments
  • You’ll be stress tested: Banks will need to be satisfied that you could handle a rise in interest rates of around three per cent in the first five years, or a change from fixed to variable rates
  • The rules are tougher: Mortgage lenders can be fined for unsuitable lending so it has become tougher to get a mortgage. This means fewer lenders will lend more than 4.5 times your yearly income
  • Get your paperwork ready: You’ll need to provide a lot more paperwork including three months’ worth of bank statements
  • Interviews can be longer: Interviews to get a mortgage can now take around two hours
  • No more self-certification: Self-certification mortgages, where borrowers were able to confirm their own income without checks, have been officially banned
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